Florida attorney explains how ladybird deeds protect homes from probate and Medicaid claims
The legal instrument, formally known as an enhanced life estate deed, allows owners to retain full control over their property while ensuring a smooth transfer to heirs.
By Bianca Herrera ·
A Florida elder law attorney said the enhanced life estate deed is a straightforward method for keeping a home out of probate and away from Medicaid estate recovery.
Laurie E. Ohall, a board-certified elder law attorney, told the Osprey Observer that she has received numerous calls from potential clients asking about the instrument or stating they need one for their houses.
The deed allows the owner to keep a life estate in the home while naming the person who will receive the property upon death. The term enhanced distinguishes it from a traditional life estate because the owner retains the right to sell, mortgage, or rent the home. The owner may also change the named beneficiary at any time without seeking permission. The named beneficiaries hold no ownership interest until the owner dies.
For long-term care Medicaid purposes, the deed is not considered a gift. Standard asset gifts to children typically trigger a five-year lookback period and incur a penalty. Because this deed is not a gift, it avoids that penalty period.
The deed does not affect a homeowner's homestead exemption or the Save Our Homes cap on property tax assessments. Creditor protection remains in place. When the home passes to beneficiaries, they typically receive a stepped-up basis, which can reduce capital gains taxes if they later sell the property.
Ohall noted that the deed has drawbacks. Florida homestead rules limit how a home can be left if the owner has a spouse not on the deed or a minor child. A deed that ignores these rules can be challenged. The deed also does not effectively name backup beneficiaries. If a named child dies before the owner, the result may not match the owner's intent. The deed handles only one asset and does not replace a will, trust, or powers of attorney.
Ohall said the document works best as one piece of a complete estate plan. Used correctly, it can spare families months of court involvement and protect the home from a state claim after the owner dies.
